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MNCs' cutting-edge research has a new address: India

Ranju Sarkar & P B Jayakumar  |  Mumbai 

When Sudhir Dixit returned home to head Hewlett-Packard Labs India in 2009, he was given a clear brief: Innovate for the next billion customers. His research is focused on how to meet the needs of non-tech savvy users like shopkeepers — can the keyboard and mouse be done away with, can they use the computer just by touching its screen (like in an ATM), speaking to it, gazing at it or waving their hand? ‘‘The idea is to make it as natural as talking on the phone or watching TV,’’ said Dixit.

Dixit is in good company. Multinationals have graduated from captive units that did low-end work to cutting-edge research in India. Companies like Google, Microsoft, GE Healthcare and Siemens have begun to use India to design and develop products, especially for emerging markets like India.

GE thus has developed an electro-cardiogram (ECG) that costs a third of conventional ECG machines. It now sells a baby warmer, used to keep babies warm after birth, at one-tenth of what this machine used to cost earlier. Microsoft, which began with 20 people, today employs 1,500 people at its Indian R&D centre. Work on its key projects, like its search engine Bing and the upcoming Windows 7 operating system, was done in India. India is SAP’s largest R&D centre outside Germany and employs 4,200 people. Half of the global development of SAP's customer relationship management software such as CRM 7.0 was done in India.

Bangalore was Google's first R&D centre outside the US. Google Map Maker, a global product which allows users to add or edit features such as roads, businesses, parks, schools, apartment buildings and localities, was developed by its engineers in India. News Archive Search, which helps users search archives for events, people or news, too was developed in India.

It has been a long journey. In the early 1980s, multinationals set up R&D units in India to make use of the low costs and huge talent pool. In 1983, Texas Instruments became the first global company to set up a R&D centre in India. In the last 25 years, the captives have matured, acquired competence to develop products for the global marketplace and are being used for innovation and to access new markets.

For instance, SAP has created the Net Weaver centre for excellence. So, any work associated with this comes to India. Yahoo does 25 per cent of its all development work in India. Adobe's global print and publishing business resides in India. Zinnov Management Consulting, which helps multinationals explore opportunities in India, estimates that 640 multinationals have together set up 750 R&D centres in Bangalore, Delhi, Hyderabad, Pune, Mumbai and Chennai.

Typically, R&D companies operate at four levels. It begins with a loanership or team extension model where a team is started in India but the manager sits in the US. Next is the ownership model, where the entire technology, component and product are developed in India. Next is the partnership model where India may own certain technologies but will work with technical partners around the world on a product. And finally, there’s the leadership model, where India takes leadership in a specific field.

Aravind Sitraman, the managing director of Cisco Development Organisation, said that things began as a cost-arbitrage but today an entire line of products is owned out of India. Cisco’s centre in India has over the years evolved from a loanership to ownership, partnership and a new leadership model. Today, it looks at Bangalore, its eastern headquarters, as a zone for developing new technologies and products to drive growth in newer markets.

companies may have had a headstart with India, but other multinationals are fast catching up. Emerson, the $21 billion US-based giant, has set up a design engineering centre in Pune. It provides product and software design, and engineering services for Emerson’s divisions worldwide. Siemens is making India a major hub for R&D related to computer aided detection products for medical diagnostics tools. Siemens Medical Solutions has over 60 per cent of its engineers and scientists in Chennai and Bangalore.

The party has just started.

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First Published: Sun, January 31 2010. 00:06 IST